Selling "Subject To"

Selling your house can be a long drawn out nightmare! But this Special Report will show you how you could have a qualified Buyer in a week or less, using the "subject to" method of selling.

It is a purchase device where a buyer takes over a property at a predetermined price, "subject to" an existing loan, which stays in the seller’s name. The pay-off of the loan is deferred until new financing is in place. In the meantime, the buyer is responsible for making the payments on the loan.

And just who is that buyer? We are. We are Sellers Select Realty Services (SSRS), a real estate investment company here in the Coachella Valley. My name is Tony Brunner. Now I can’t guarantee to buy your home in 7 days or less. But, if you do want to talk to us, I can certainly promise to act in good faith and not waste your time.

Three reasons: 1) it can be done very quickly, meaning immediate relief from house payments; 2) you may prefer an income stream rather than getting all cash at the sale; and 3) it can help you keep your equity intact.

Let’s take the simple sale of your property. If you sell now, in the conventional way, you can burn a lot of your equity just in the process. Say you have a $100k home:

• You give up, let’s say, a 7% discount just to get the house sold. This is the "price drop" your Realtor will likely ask for. It could be more.
• You give up 6% in real estate commissions (standard in California).
• You pay, say, 4% in closing costs.
• You wait, say, 3 months for a purchase contract and another 1 month waiting for the close of escrow. Let’s say your house payments are $750 per month. That’s 4 months at $750, which totals $3,000, or another 3%.

Do the math. On a simple sale of your property, you have just dropped 20% of your equity! This is $20,000 on a $100,000 home. It could easily be more.

Let me tell you a little bit about me. Then I’ll get into what we do. My name is Tony Brunner. My background is in law and I am an attorney, admitted in New York. However, I do not currently practice law and have been a licensed California real estate broker since 1985. I have been involved in real estate sales, leasing, development, and property management almost all my working life. I am also a licensed California General Contractor. I tell you this to let you know:

1. I know my stuff.
2. I am bound by stringent professional ethical standards of conduct.

I operate this company in partnership with my wife, Barbara, whose background is in banking.

From my experience as a Realtor I know that there is an always-present group of sellers that most real estate agents simply do not know how to help. The Realtor community can’t help partly because it does not have the necessary specialized knowledge and training, and partly because it is set up to operate on a straight commission basis.

So SSRS was formed to fill a need. We specialize in showing Sellers that they really do have solutions, even after the professional experts have given up. While we are a licensed Realtor, we do not list houses. We are an investment company. We buy and sell houses. We buy houses just like yours in neighborhoods throughout the Palm Springs Desert Region. Check out our web site at www.deserthomebuyer.com.

We help those homeowners who just want out of the house, with their mortgage taken care of, with no hassle, and to suit their time frame. If you are this kind of Seller, we can probably offer just what you need.

What if you are being transferred? We can buy your house today. The average time on the market when selling a home through a Realtor is 90 days. That is 3 months before a home is sold and then you add another 30 - 60 days to close the buyer’s loan. When you are being transferred, time is the most important factor to you. You want to leave now, knowing your home is taken care of.

What if you are getting divorced? Now you are faced with your income being cut in half. You usually have to downsize. We can buy your home today so you can start over.

What if you are buying a new home? We can buy today so you can build tomorrow. AND we can let you live in your house while your new home is being built. No need to move twice or put your belongings in storage.

What if you have lost your job? You can’t afford to wait for your home to be sold. You need to move now and get debt relief. We can offer you that.

What if you have little or no equity? We can still work with you and create a win-win for both of us. We can help you out of your situation.

What if you just want to move to another house? No need for you to wait to find the perfect buyer who has the money and credit to purchase your home. No need to deal with endless lookie-loos traipsing through your house. No need to leave your home while an open house is going on. You just deed the home to us and move on.

What if, for any reason, your dream house has now become a living nightmare? We can bring order and calm to your situation.

People who have never tried to sell a home "by owner" just have no idea of the things to be done and the frustrations to be endured. You research the price from a friendly title company. You buy your sign, you place your ad, and you worry about what paperwork you will need.

And then you wait for the calls. First, you get countless calls from pesky and persistent real estate agents who want your listing and insult your ability to sell the home on your own. You spend a lot of energy fending these folks off. And then you worry about the ad that doesn’t seem to get anyone but Realtors to call. So you make changes in the ad and incur more expense.

And then you may actually show your home to the strangers who wander through aimlessly. Some seem interested but they never get back to you. Still others will offend you with insultingly lowball offers. You call back the lookie-loos and leave messages on their answering machines. Then you wait.

Then, hurray! Somebody actually signs a purchase agreement. You are ecstatic! But weeks pass and you wonder what is wrong. Then eventually you find out from the embarrassed buyers that they can’t get financing. So the deal falls through. You sure didn’t expect that to be your problem! At least if you had used a competent Realtor, s/he would have prequalified the buyer ahead of time.

But you endure all this because you really do want to save that commission. Truth to tell, maybe you can’t even afford the commission because there is not enough equity in the house to pay the agent.

So, although selling "by owner" seemed the only way to go, it turned out to be more of a struggle and a let down than you could have imagined. In fact, a nightmare!

Now, as a Realtor myself, let me clue you in on what’s going on here:

• Open houses: The Realtor holds an open house to sell your home, right? Wrong!! The Realtor is using your house to attract buyers for other property. S/he is building a client base. The Realtor knows that it is highly unlikely that a visitor to your open house will actually buy the home.
• Most listing agents rely almost solely on the MLS to sell your house for them. Beyond some token advertising (designed to get buyers for them more than for you) they do very little real selling for you. Your house is just an MLS entry waiting for other agents to look up.
• The Realtor has next to nothing at stake. S/he has no personal liability and suffers next to no loss if your house sits unsold for weeks on end. In fact the Realtor probably has you all tied up in a listing for 6 months – with no guarantee of a sale.
• Ultimately, your house is just a number. The Realtor always has another client, another listing, and another sale.

When you list with a Realtor, everything boils down to the sheer time it takes to sell. You have a nice house, it’s priced right but it just won’t move – even after the price reductions the Realtor will demand in order to make the sale. And now you have deadlines. You have to relocate, you have to settle a divorce, you have to avoid foreclosure, and you just must get out from under this house payment. "Want to sell" becomes "have to sell" very fast and puts you in a bind. And all the while you would dearly love to keep your equity intact.

Imagine sitting across your kitchen table from someone who says, "We want to buy your house now. We can close with all cash if necessary. Credit? No problem! Non-assumable loan? No problem! Payment arrears? No problem! Time to close? No problem! No equity? No problem! Plus, if you have equity we can help you keep it intact."

We don’t know what your circumstances are, what your home is worth, or what you owe on it. But these are details. They are important details and they can amount to major problems for you. But for us they just influence the way we structure a transaction. Now, we can’t guarantee a solution for you. But we can and guarantee that we will be fair to you.

We are investors. We buy and sell property. And we know several ways to do it. We are transaction engineers. We know how to make a profit on homes that real estate agents have passed up because there is not enough equity to pay a commission. And (unlike Realtors) we do not have to make money now. We can wait. With your property, we’ll likely suggest several alternatives and have you select the one that best suits your circumstances.

We will agree on the purchase price and verify the amount you owe on your mortgage. Then, if the circumstances are right, we will pay all cash at the closing. If not, we will work out a way to cover your mortgage payments and maintenance responsibilities for a while and put a Tenant/Buyer in the house, until we get new financing on it. The actual mechanism might be a simple "subject to" or a lease option or a land contract or the NARS Equity Holding Trust™. Regardless …

You get immediate relief from your monthly obligation to the mortgage company.

We don’t have to insist on a low-ball price or require that you have a lot of equity to make our transactions work. We work with all kinds of conditions and can usually create solutions that are beyond the capability of the so-called "experts."

We are Investors – not Realtors. Let’s take a look at what the difference means to you.

1. We will likely make your payments for you while we find a buyer. A Realtor will not.
2. With us there is no long drawn out listing agreement. A Realtor will try to keep you on the hook for three to six months – with no guarantee of a sale.
3. With us there are no closing costs to you. A sale through a Realtor could cost you 4% in closing costs, on top of the Realtor’s 6% commission.
4. With us there is no commission. A Realtor’s commission runs 6% in this area. So with closing costs and commission, you are taking a minimum 10% hit. This is after the price reduction your Realtor wants, in order to make the sale.
5. We can close fast. With a Realtor, even once you find a buyer, you are looking at an additional month (at least) to close escrow. And all the while you are out principal, interest, taxes, insurance and maintenance.

One of the main benefits we offer is Peace of Mind. One of the hardest parts of having to sell your house and move is the uncertainty of the process. You don’t know how long it’s going to take. Your life is in limbo. But, when you work with us, you will know that your home and payments are taken care of and that you can start over with peace of mind. We can take care of all the paperwork in about a week. We simply order the title research, and draw up the papers. We can set a date when you can move out and we will take over the house after that.

We can make payments on your loan while our tenant/buyer builds equity and finds their own financing. The best part is your loan doesn’t even have to be assumable for this to work! Our "subject to" program works regardless of the type of loan – assumable or non-assumable, FHA or Conventional.

We take care of your monthly payments; and take on all responsibility for the maintenance and upkeep of your property. Essentially, this allows you to liquidate your asset before it becomes a liability! Our "subject to" program can work to your benefit in almost any situation.

Your options are not unlimited. You probably have a time frame problem. A listing does not solve your time problem. Ultimately, we the investor look like a good option, especially when we can show you how to keep your equity intact

Let’s summarize the benefits of this program for you, the Seller. All or most of them will apply in your situation:

• Fast and Flexible Sale of Your Home – You select the date that you want to move out. We can complete our transaction in as little as 7 days!
• Certainty of Sale – Avoid the disappointment of ‘selling’ your home, waiting who knows how long for the buyer to qualify and then finding out the deal fell through for any number of reasons. Then the process starts all over again, but the pressure is really on you now.
• Avoid Sales Commissions – No need to pay a Realtor the typical 6% fee.
• Get Quick Relief from Mortgage Payments – Compared to a listing that goes on and on, month after month, payment after payment!
• Avoid Typical-Closing Costs – Avoid the necessity of paying for Surveys, Title Insurance, Deed Preparation, Courier Fees, Recording Fees, etc.
• Eliminate a Listing Agreement – We go straight to the Sale and Purchase Agreement. Remember, we are buying your house, not listing it.
• Eliminate Time Consuming House Showings – You won’t have to show your home anymore. And we will probably show your house very few times before we find a qualified, motivated tenant/buyer.

Depending on the specifics of the transaction, here are the principal benefits for our Tenant/Buyers.

• They get time to build up equity in the home of their choice while at the same time improving their credit rating.
• They get time to build up their base income.
• They get time to build a down payment.
• They are able to fix the price of their future home and avoid price inflation.
• They get time to fix any possible credit problems in order to qualify for house financing.
• They get the benefit of income tax deduction (Equity Holding Trust only).
• They benefit from pride of ownership in a place they can call home.

We develop and maintain files on qualified buyers looking for houses. They all have their own criteria for monthly payments, down payment, location, number of bedrooms and bathrooms, etc. And they are all motivated. So it is relatively easy for us to find a Tenant/Buyer for your house.

1. You give us some preliminary information on the phone concerning the property, its desirability, mortgage information, your timing and reasons for selling. This will give us an insight into the best way to structure the transaction. We will then run a property profile and perform a CMA (comparative market analysis) to determine the approximate value of the house.
2. You will then show us your home and point out any repairs that need to be made. At this point we will also go over the paperwork and discuss alternatives available for a transaction that will work for both of us. We will leave samples of all documents that will be signed so that you may review them with whomever you choose.
3. We can be very flexible as to when you want to move out. Just let us know, so that we can plan to advertise the property and show it to prospective Tenant/Buyers.
4. We then run a title search and, all being well, will present our formal offer for your execution. Some of the documents will need to be notarized.
   
5. When you have moved out, we will transfer the utilities to the name of the Lessee and notify the insurance company and lenders. When our Tenant/Buyer exercises their option, we pay off your mortgage and notify you that your mortgage has been satisfied.

Most loans, probably including yours, contain what is known as a Due on Sale clause. The Due on Sale clause states that the lender has the right to call the entire note due if there is a transfer of ownership. So, theoretically, if your lender learns of this transaction he can call the loan due.

This sounds as though it should be a major problem to us. But let’s look at it from the lender’s point of view.

The job of a lender is to collect payments. The lender loans out money at a higher interest rate than it is paying and derives its income from the "spread." If the lender calls the loan due, it runs the risk of losing income. Lenders will rarely call due a loan that is performing.

The lender not only runs the risk of losing income. It also runs the risk of having to take the property back, if it is not refinanced. The Federal government "punishes" lenders for having non-performing loans on their books by restricting their ability to make new loans

One more thing: The terms of an FHA-insured loan requires that the lender contact HUD for permission to call a loan due because the property securing it is transferred to a new owner (subject to). To date, there have been no reported cases in which HUD actually gave that permission.

We discuss the Due on Sale clause here at some length because you should know about it. In fact our documentation fully discloses this potential problem to you. However, in our view the Due on Sale clause is a Sheep in Wolf’s Clothing!

Nonetheless, we have in our arsenal a device known as the North American Realty Services Equity Holding Trust™. It has a cost to you in closing expenses but it totally avoids the Due on Sale issue. You can learn all about it on our web site: www.deserthomebuyer.com. Also refer to www.landtrust.net.

There’s no way we can guarantee our tenant/buyer won’t damage your home, since we won’t be living with them. But under our agreement, if that happened, we would repair it at our expense. In any case, this is why we carry insurance, which we are paying for.

Besides, we obviously want to avoid this risk. This is why we very carefully screen the tenant/buyer for suitability. Our objective is to find a buyer who will eventually qualify for a loan, and not a ‘tenant.’ Our tenant/buyers have the mindset of owners. They are not just renters. They are rarely a problem. After all – it is their home now and they are working to own it. So damage is rarely a problem. But, if it happens, we’ll fix it. Our agreement will require this.

We can’t give you an exact time. It will be up to the tenant/buyer to make that decision within the time frame they have. It will depend on their individual credit situation and how long it will take them to get financing to buy us both out. Obviously, we only get paid out when they buy, so we are highly motivated to get them qualified and financed. We use our own network of lenders to help with this process. In the meantime, you are not burdened by house payments, because we are making them for you.

We absolutely understand your concern. After all this involves your home. However, our reputation is also at stake, to say nothing of the professional ethical obligations we mentioned earlier. After we have established that there is mutual interest on the phone, we’ll meet face-to-face and answer all your questions. If we can create a solution that will work for both of us, that is great. If not, that’s fine too. A "subject to" transaction does not work for everyone and it is not in our interests to try and force a square peg into a round hole. If you are uncomfortable with what we propose, we’ll shake hands and part friends. If you like the proposal, we will do our level professional best to make sure that it works out for both of us.

Remember that that is our problem. If they don’t pay, we will.

Why would we not make the payments? We don’t make any money until we get the home re-financed into the next person’s name. That would be like working all week and not going to pick up our paycheck on Friday.

We can pay you directly and let you forward monies to the mortgage company yourself. Or, we can set up a third party escrow company, such as North American Loan Servicing at http://www.sellerloans.com, to collect from us and pay it for you. We handle all the paperwork. If we didn’t pay, the lender would immediately notify you. So you’re always on top, whichever method you choose. Remember that making the house payment is our problem; we bought your home "subject to" your mortgage.

Also remember that any increases in taxes, insurance or homeowner’s dues are our responsibility.

You will have a contract in hand that will show your new lender that the payments on your old house are being made by someone else. It would be just as if you had a rental property. Your debt ratio will hardly be affected.

That’s certainly an option and we’ve already talked about it. But obviously a Realtor won’t make your payment for you while s/he is trying to sell your house. Nor is the Realtor as deeply committed to a listing as we are to ensuring that our transaction is a success. We will make a personal commitment to making your payments and maintaining the house, until our tenant/buyer gets financing. Here’s what you need to know about Realtors:

Realtors are great when: You are looking for that Perfect Buyer; when your house is not over-financed; when your house is in super condition; and when you have all the time in the world to wait for the best price.

Realtors are not so effective when:

You have low equity: Many homes are over-financed and have hardly any equity in them. When you add the Realtor’s commission and closing costs to the loan balance, the home becomes over priced and will not sell.

The Home is in poor condition: Homes needing repair don't sell because that Perfect Buyer gets scared off. Oftentimes it is hard to get financing for homes in bad condition. This alone eliminates most Buyers.

You don’t have time to wait: A fast sale is a big problem for a Realtor. It’s a fact. Listings take time to sell. First the Realtor has to find the Buyer. Then the Buyer has to get qualified. Then the escrow has to close.

Closing is uncertain: A lot of things can go wrong: Buyer's remorse, loan not approved, appraisal or inspection does not pass, bad survey, bad title, etc. Bottom line: you can’t rely on an escrow until the money is in the bank!

You don’t want the upfront expense or hassle of a listing: You don’t want to spend money on remodeling and you don’t want to spend months keeping the house ready to show.

Problem buyers are involved (which is a lot of the time): buyers are picky, choosy, and make poor decisions. They procrastinate and change their minds. On top of that, they have a hard time qualifying for financing. They have credit problems and lack down payments and funds for closing costs. They may even ask you to contribute to closing costs and loan fees.

Lenders are involved (which is most of the time): The great majority of home purchases involve traditional financing through mortgage companies. The closing of your sale depends heavily on the competence and diligence of the mortgage company, loan officers, and loan processors, who work on getting your Buyer financed.

Unfortunately, the lending industry (not all of it but in significant part) suffers from a lack of professionalism. This is especially so during times of heavy loan activity when interest rates are low. This causes the hire of unqualified and inexperienced people. Unfortunately, this in turn has a direct effect on the ability of your Buyer to get funded.

This is made worse by the "bait and switch" techniques of some unscrupulous lenders, who will deliver loans at higher than anticipated costs in the knowledge that buyer and seller will go along with it – just to get the darn thing closed.

Yes. Buying homes subject to the existing mortgage is only one of the tools in our toolbox. We can’t cover them all in this report. However, you will find information on them at our web site: www.deserthomebuyer.com. We can discuss lease-options, land contracts, and the Equity Holding Trust™. 

This report is just to introduce ourselves and give you an idea of how we can help you. If it strikes a chord with you, just contact us. Our phone number and email address appear at the end of the Report.

If by chance we can’t do business, that’s OK. But we honestly believe you’ll be pleasantly surprised when you call. We specialize in solutions for sellers! And by calling, you give us the chance to be your solution. Give us a try.

You can contact me right away on (760) 329-3650. Or via email at tony@deserthomebuyer.com, or through our web site www.deserthomebuyer.com

We have given you a lot to think about. But the bottom line is that we can help you sell your house fast! Contact us. You have everything to gain and nothing to lose!

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